The popular methods of preparing accounts of joint venture are as follows:-
- Accounts kept by one party.
- Accounts kept by all parties.
- Accounts kept by separate books.
- Accounts kept by Memorandum Method.
These methods of accounting records of joint venture are described briefly as follows:-
Accounts kept by one party
Under this method account are recorded by one co-adventurers and he is responsible for the entire accounting recording. He is given money by all co-adventures and he does the work for the joint venture for which he may be given commission if all are agree. In the end, he will prepare Joint Venture Account and will calculate profit or loss on joint venture.
Accounts kept by all parties
Under this method all the co-adventurers maintain the accounts in their respective books relating to Joint Venture. Each venture will convey his transaction of Joint Venture to other ventures. By this information every venture will prepare its own Joint Venture Account and also the personal accounts of other ventures.
Accounts kept by separate books
Under this method separate books are kept for the joint venture through opening of a separate bank account. Contributions by the co=adventurers are deposited in this account; as far as possible payments on account of the joint venture are made out of this bank account. At the close the profit or loss is transferred to the accounts of the co-adventurers and the amounts due to them are then paid out of the joint bank account which is then closed.
Accounts kept by memorandum method
Under this method the profit or loss on joint venture is known with the help of Memorandum Joint Venture Account. Hence only one account is opened named as “Joint Venture with…..Account”.